Malaysian Palm Oil Futures Decline Amidst Global Concerns
Malaysian palm oil price witnessed a robust surge for the third consecutive session on Wednesday, driven by scorching weather conditions and a looming supply deficit ahead of the Eid holiday, amidst a notable decline in production during Ramadan.The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange closed 89 ringgit higher, marking a substantial 2.06% increase to reach 4,401 ringgit ($925.94) per metric ton. Earlier in the trading session, the contract soared by 3.01%, hitting its highest level in 13 weeks.
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PALM OIL FUTURES PRICE IN RINGGIT |
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| Month | Last | Open | Change | High | Low |
| Apr’24 | 4576 | 4508 | 112 | 4600 | 4505 |
| May’24 | 4473 | 4378 | 78 | 4527 | 4370 |
| Jun’24 | 4401 | 4306 | 89 | 4443 | 4292 |
| Jul’24 | 4330 | 4217 | 101 | 4362 | 4207 |
Click Here To View April 2, 2024 Report
Impact of Ramadan on Production
A Kuala Lumpur-based trader highlighted the impact of the impending Eid holiday coupled with the Ramadan month, attributing surge in futures to a slowdown in production. The trader noted that the combination of reduced production during Ramadan & persistent hot weather conditions in recent weeks has led to diminished yield, resulting in a noticeable shortage of palm oils in the market.
Outlook and Implications on Global Trade
India, the world’s largest importer of vegetable oils, is poised to witness a 7% increase in rapeseed and mustard output compared to the previous year, reaching a record high of 12.09 million metric tons in 2024. This surge in domestic production is expected to alleviate India’s reliance on edible oil imports.
In March, India’s palm oil imports experienced a notable decline to a ten-month low of 481,000 tons, primarily driven by increased imports of sunflower oil amidst favorable pricing. Meanwhile, Malaysian palm oil product exports for the same period are projected to see a substantial increase, ranging between 11.77% and 29.2%, as reported by cargo surveyors Intertek Testing Services, AmSpec Agri, and Societe Generale de Surveillance.
Influence of Geopolitical Factors and Oil Prices
The surge in palm oil price, fueled by a larger-than-anticipated decline in U.S. crude inventories and escalating geopolitical tensions, has heightened concerns among investors regarding tighter supplies. The strengthening of crude oil futures renders palm oil a more appealing choice for biodiesel feedstock, further bolstering its market demand.
In conclusion, Malaysian palm oil market reveals a delicate interplay of domestic and global factors. As, these uncertainties, a comprehensive understanding of the evolving dynamics for palm oil price in Neutral To Bullish Position due to narrow gap between rival soft edibles oils, it may hovering in the range of MYR4,000 to MYR4,500 per ton.
